Fifth Circuit Address Rule (B) Attachment of Bank Accounts When Is A Bank Account “Found” In the District

Ultra Deep Picasso Pte. Limited v. Dynamic Industries Saudi Arabia Limited, 

2024 WL 4523809 (5th Cir., Oct. 18, 2024).

            Rule(B) attachments do not get a great deal of attention from federal courts. This case addresses the requirements to attach a bank account of the defendant in the U.S. for subsea services rendered in the amount of $10 million. Ultra Deep asserted that Dynamic did not pay for the services and filed a Complaint in the Southern District of Texas to attach funds in Riyad Bank in Houston to secure its claim in arbitration.[1]

            Riyad Bank is licensed with the Texas Department of Banking as a “foreign bank agency” and not a full branch of the bank.[2] As such, “it neither holds or accepts deposits of assets, nor allows clients to withdraw funds, and it cannot access accounts held by Riyad Bank in Saudi Arabia.”[3] Dynamic in an uncontroverted declaration of its general manager maintained that it has no “leased, rented, or occupied property in the United States, or had employees or maintained an office”[4] in the U.S. and has no bank accounts in the U.S. It also has no income from U.S. operations.[5]

            The magistrate granted the Motion to Vacate the attachment under Rule (E)(4)(f) which was adopted by the trial judge. This appeal followed.[6]

            The appellate court noted that many courts adopted the four-part test of Aqua Stoli Shipping Ltd. v. Gardner Smith Pty Ltd.[7] to decide whether the claimant has met its burden of proof. Noting that the Fifth Circuit has not expressly adopted these factors, it has applied them. The third factor is the critical one in this matter.[8]

            Ultra Deep asserted that the property does not need to be within the district in which the attachment is served. “[I]t is sufficient if the property is ‘in the hands of’ a local garnishee, even if the property is outside the district.”[9]

            The panel abjured this proposition. Relying on Boland Marine & Indus., LLC v. Bouchard Transp. Co., Inc.,[10] the court stated that there must be personal jurisdiction over the garnishee as well as in rem jurisdiction over the asset to be attached.[11] In other words, the asset to be attached must also be within the jurisdiction of the court. 

            Turning to the attachment of the bank account, Boland Marine answers that question. A bank account is where the funds are available to the account holder to withdraw.[12] Riyad Bank has one location as an agency bank. Ultra Deep failed to produce evidence that Dynamic had access to the account or could withdraw funds from the bank.[13] Accordingly, the judgment of the trial court was affirmed with dismissal of the claim.

            A copy of the WestLaw version of the opinion is attached.

[1] 2024 WL 4523809 at *1.

[2] Id. at *2.

[3] Id.

[4] Id. 

[5] Id. 

[6] Id. at *3.

[7] 460 F.3d 434, 445 (2d Cir. 2006): “1) it has a valid prima facie admiralty claim against the defendant; 2) the defendant cannot be found within the district; 3) the defendant's property may be found within the district; and 4) there is no statutory or maritime law bar to the attachment.”

[8] 2024 WL 4523809 at *3.

[9] Id. at *4.

[10] 2020 WL 10051743 at *8 (W.D. Tex. 2020).

[11] 2024 WL 4523809 at *5.  

[12] Id. 

[13] Id. at *6.